By BECKY KISER
Hays Post
The pros and cons of being a franchise owner in Hays were discussed by three local business people at Tuesday's Trispective hosted by Grow Hays.
Business creation and business retention are part of the mission of Grow Hays, said Doug Williams, executive director, and franchises are included in both areas.
"In my mind, a franchise is the opportunity to take a proven business model that's been replicated in many places and put that in place in a particular market," Williams said.
The panelists each had their own relationship with franchise opportunities.
Jamie Kuehl, a Hays native now living in Dodge City, is owner/operator of the two McDonald's restaurants in Hays, one each in WaKeeney, Russell, as well two in Dodge City.
His parents, Rick and Gail Kuehl, moved to Hays to open the first McDonald's franchise in 1979. His grandfather owned the chain's 71st store, which was built in the St. Louis, Mo., area.
Although he wasn't interested in it when he was young, Kuehl ultimately decided to join the family business as a next-generational operator.
That process requires a seven-year training program with McDonald's. A franchise lease is for 20 years and costs $45,000.
"I realized I wanted to be in business for myself, be an entrepreneur," Kuehl said.
One of the best-known franchises in the world, McDonald's has a lot of power.
"Jamie's Burger Shack wouldn't sell very many hamburgers," Kuehl said. "The global power of McDonald's brings a lot to the table, not only in national and local marketing, but in purchasing power for product."
The biggest challenge for Kuehl in the towns where he has restaurants is staffing.
It was a problem echoed by Kathy Schupman, owner of Kat's Hallmark Shop in downtown Hays and by James Younger, property manager at Big Creek Crossing, 2918 Vine, who works with franchisees in the shopping center.
Kuehl referred to a 20-year-old study that predicted the current scenario of more job availabilities than people to fill them. The COVID pandemic compounded the problem.
Kuehl estimated his labor costs have jumped $3 million in the past two years. Commodity costs are also up.
"That's why those burger prices keep climbing, just like everything else," he said.
He also pointed out to potential franchisees that McDonald's owns the land and the building its restaurants occupy.
The three panelists also stressed that anyone considering buying a franchise must do their due diligence and read the fine print of the franchise agreement.
Younger helps guide his potential mall lessees in the right direction, whether they're permanent, seasonal or temporary.
"Do they have a feasibility study, a marketing study? As a leasing agent, my approach is not we can't, but how can we," he said.
Non-permanent franchise agreements are a "less expensive way to get into entrepreneurship," Younger said.
Younger said franchises appreciate that Hays is investing in new schools, has a low crime rate and has respected major employers.
"But many franchises want 50, 60, 100 employees, and with an unemployment rate of less than 2 percent, that's hard to find. We also have a lack of affordable housing for people who move to Hays to work those jobs," he said.
The role of indoor malls has changed dramatically in the American business landscape.
Many stores want their own outside entrance with branding on the building. There are also fewer anchor businesses.
"The leasing process for Big Creek Crossing is anywhere from six to 12 months. Each case is different in negotiating for space," Younger said.
He estimated 10 to 15 percent of the current tenants are franchises.
Schupman offered a different perspective on the importance of location.
Hallmark is not a franchise. In order to use the national brand name, Schupman first had to prove she had $500,000 in assets. Although there is not an upfront buy-in for the five-year lease, she pays a monthly advertising fee to Hallmark.
Schupman's shop was first located in Big Creek Crossing, where she found many potential customers to be young teenagers uninterested in the Hallmark name and older walkers exercising, uninterested in shopping.
She then moved to the strip mall, Tebo Village, north of Interstate 70 at 48th and Vine, where she had many out-of-state customers in addition to her dedicated area clientele.
After six years, she needed a bigger store and moved to downtown Hays, 1003 Main, on June 14. The relocation took Hallmark several months to approve. Schupman said the new store site does get more foot traffic and called the downtown atmosphere "wonderful."
Williams noted downtown locales typically don't attract franchises or branded stores.
One of the most positive aspects of her business is the well-known Hallmark brand and quality and Schupman's ability to do local marketing. She recently purchased a $36,000 computerized cash register that keeps track of the customer rewards/points system.
"What I am is community-driven, grassroots," Schupman said. "I can tailor to what I want."
Two products you'll find in any Hallmark store are the popular Hallmark Christmas collection ornaments and Hallmark-branded greeting cards. There is a large gift selection as well, but Schupman does not have the flexibility to price her Hallmark-branded products, which are pre-priced.
All three speakers stressed a potential franchisee owner should be sure it's something they really want to do. Kuehl and Schupman likened being a franchise owner to being married.
"It also involves your entire family. It's your life," Kuehl said. "It's not a hobby."
"You have to be flexible," Schupman added.